Sir Philip Green’s retail empire has warned there is “material uncertainty” over its future, despite the rescue deal it struck this year, after posting an annual loss of more than £177 million.
, which is the holding company of Sir Philip’s Arcadia business, and its auditors PWC sounded the going concern warning in the group’s latest accounts for the 53 weeks to September 1, 2018 which showed it swung to a pre-tax loss of £177.3 million from a £53.5 million profit in 2017 after a challenging year.
“The retail landscape has changed dramatically over recent years and the increased competition from other high street and online retailers in particular has had a significant impact on our performance,” Taveta said.
The company behind Topshop reached a series of restructuring agreements in June with its creditors to cut rents on some shops and close 50 others to avert a collapse of the business.
Sir Philip’s fashion empire is controlled by Lady Green, his wife. It employs about 17,000 staff and owns brands including Burton, Dorothy Perkins and Miss Selfridge.
In accounts filed at Companies House yesterday and signed off at the end of August, PWC, Taveta’s auditor, cautioned that if Taveta is “unable to deliver in full its business and recovery plan” or its profits miss management’s expectations, there is “a risk that the group will have insufficient liquidity within its existing financing arrangements to meet its obligations as they fall due”.
Both Taveta and PWC also warned about the risk posed by a £310 million loan secured against the Topshop store on London’s Oxford Street that matures in December. If the mortgage cannot be refinanced, Taveta’s lenders can either seek repayment of the loan or enforce their security.
A source close to Taveta said that the property was worth “considerably more” than is owed on it. The risks outlined in the accounts could force the group to seek additional financing, Taveta said.
Sales at the business fell by 4.5 per cent to £1.8 billion. It was pushed into loss by £217.1 million of exceptional items, mainly due to a provision for onerous leases on loss-making shops.